December 8, 2010

Employer Sanctions Law

On the day the United States Supreme Court is hearing a case about Arizona’s employer sanctions law, ASU law professor Andy Hessick explains the legal questions involved. Also, Howard Fischer of Capitol Media Services reports from Washington.

Ted Simons: Arizona employers who knowingly hire undocumented workers can ultimately lose their business licenses. That's been the case since 2008 when Arizona's employer sanction law went into effect. That law has been challenged in the courts and so far it's been upheld as constitutional. Today the U.S. Supreme Court heard the case. In a moment, an ASU law professor explains the legal argument, but before we get to that, earlier today I spoke with Howie Fischer of capitol media Services. He's covering the story in Washington. Howie, thanks for joining us there in Washington, DC. Describe the scene in the courtroom today.

Howie Fischer: Well, it was standing room only, if you were allowed to actually stand in the court. Many people are very interested in the issue, because of the fact that while this is an Arizona law, there are other states that are mimicking this. They're also looking at this as the first test of senate bill 1070. The bottom line question of course is, has the federal government totally preempted the issue of immigration, or can states impose their own specific restrictions on that? So a lot of questions, very active bench, a lot of questions from the justices.

Ted Simons: I want to get to those questions in a second, but first of all, regarding the arguments for and against the employer sanctions law, what did you hear from the attorneys?

Howie Fischer: Well, the challenge right now is by the U.S. chamber of commerce, and by the Obama administration represented by the solicitor general's office. Their argument is that the 1986 immigration reform and control act totally preempts states from doing anything like this. You can't have 50 states or 44,000 communities enacting their own laws. There is an exemption in that 1986 law for licensing laws, but what their argument is is that, A, this isn't a licensing law, because the fact we're talking about not just taking away maybe somebody's business license, but we're talking about their certificate of incorporation. Their articles of incorporation, which is the death penalty. The other argument they said is even if states can take away licenses, that can only be done after a company was found guilty by a federal tribunal of violating federal immigration laws, then the state can come in. Our law in Arizona says a state judge determines if you've broken the law and that, they say, goes beyond what federal law allows.

Ted Simons: Again, those supporting -- go ahead, please.

Howie Fischer: On the other side of course you have the governor, the attorney general's office saying there is a reason for that licensing exemption. Congress specifically intended for states to do things above and beyond. That the Arizona law does not impose civil fines -- it does not impose criminal penalties, it simply says if in fact you are knowingly or intentionally hiring undocumented workers, then in fact you are not fit to do business in Arizona. And we can take away that license to do business.

Ted Simons: Let's talk about the questions now. What did you hear and were the questions aggressive, were they pointed, did they seem like they were suggesting the court would go one way or the other?

Howie Fischer: Well, I think the court is fairly well divided. I think on one side Scalia was very critical of the arguments by the business community, who said we have to wait for federal action. And Scalia said, now wait a second, the federal government has not gone after employers, has not gone after companies, so if you have to wait for something that’s not going to happen, then in fact the state is stuck. I think Justice Kennedy also had some very specific questions about that. Justice Roberts in particular chief Justice, said there's a reason Congress put in that exemption for licensing laws. And what constitutes a license, we can fight about, that but there's a reason. On the other side, you had some of the justices who said, now, Arizona law is one-sided. Under federal law, it's a balance. If in fact -- it's designed to say that we don't want you hiring illegals, but on the same point we don't want you to discriminating against people because they look like they might be illegal. And so we're going to impose equal fines on each side. Arizona is a one-way law. And based on that, they said if an employer is faced with somebody who might be illegal, who they're not sure about, that they're going to air on the side of not hiring that person are for hiring that person means they'll be put out of business. The attorney general’s office said, there are protections, if you use the federal E-verify system, you can check online if somebody is entitled to work here, then there is no discrimination against employers.

Ted Simons: All right.

Howie Fischer: That's what the court has to sort out.

Ted Simons: OK. Now, we've got the arguments there, we've got the questions coming from the justices. Afterward, what kind of reaction? First, who from Arizona was there, and what did you hear from them afterwards?

Howie Fischer: Well, obviously the governor was here, while she wasn't the one who signed the bill, it was signed by Janet Napolitano, who curiously enough is now part of the Obama administration that's suing to overturn the law, the governor said, we're here to do the job the federal government won't do. Essentially an echo of her election campaign. Russell Pearce said that we believe that if you allow employers to skirt the law and hire illegal immigrants, you're discriminating against the employers who obey the law, and we're going to force these employers out of business, and we think there's sufficient safeguards. Attorney general Terry Goddard also showed up because his office is defending it, though it was solicitor general O'Grady who argued it. On the other side, we got reaction from Carter Phillips, who represents the U.S. chamber. And he said that Congress never intended for the states to be this active. He sees the licensing exemption as a very narrow exemption and he wants the courts to go along. One of the interesting things about this is Elena Kagan, the newest justice of the court, recused herself because she was the solicitor general when the case was being prepared. And now the solicitor general's office is suing Arizona. So you have the possibility of a 4-4 decision. Well, in this case, if it's a tie, Arizona wins. Because it means it upholds the ninth circuit ruling, which concluded that Arizona was entitled to enact this law.

Ted Simons: The high court is being asked to decide if Arizona's employer sanctions law is preempted by federal immigration law. Here to discuss the legal arguments is Andy Hessick, a law professor from ASU's Sandra Day O'Connor College of Law. Good to see you again. Thanks for joining us. Give us a real quick history of this thing and what the law is designed to do.

Andy Hessick: Sure. So under federal law, the states are -- traditionally states were able to regulate employment. And then that included employment and that involved illegal immigrants and anyone else. But in 1986, the federal government passed a law that prohibited state companies from employing illegal immigrants and other unauthorized workers. But they left a little exception for -- for states to impose sanctions based on licensing laws. And in 2007, Arizona passed a law that said that a business that employs an unauthorized worker under federal law shall have their license suspended or revoked.

Ted Simons: OK. So this preemption basically from the '86 law says no preemption other than through licensing and what, or similar laws, and it sounds like the lower court said, good enough.

Andy Hessick: That's right. So what the federal law says specifically it says that no state can impose any sanction except through its licensing laws or similar laws. And here Arizona has said, well, our law imposes the sanction of suspending licenses or revoking licenses, but then it defines licenses very broadly. It doesn't include only licenses to do particular things, it defines licenses to include things like articles of incorporation.

Ted Simons: OK. So again, this coalition, an interesting coalition, between the chamber of commerce and the ACLU and a lot of points in between, they're basically saying, if the federal law super seeds here, and the idea of local judges getting involved in federal issues came up today. Talk to us about that.

Andy Hessick: So it's a slightly different issue. So one question is whether or not these things that the states are purporting to regulate are indeed licenses. Whether articles of incorporation are licenses. There’s a second question that said even if they are licenses, there's a question whether state judges should be allowed to determine whether or not federal immigration laws have been violated in a way that warrants the revocation of the licenses. Under federal law, a federal agency has to determine whether or not an employer has hired someone who is an unauthorized worker. Under the Arizona law, a state judge is allowed to make that determination. So there's potentially a bit of a conflict, because the federal law says -- federal administrative agency, not even a court, that's make this determination. But under state law it says state court can make this determination.

Ted Simons: And again, going back to the idea of why the feds want this kind of control here regarding -- they want uniformity. They're looking for uniformity of laws as opposed to every municipality in the country coming up with penalty and fines and these sorts of things.

Andy Hessick: Absolutely. And there's many ways in which uniformity could be lost. For one thing, different states could define licenses in different ways. Arizona might say includes articles of incorporation, other states might say it doesn't. For another thing, even if we all agree what licenses are, one state might say, under our standards this, guy is an unauthorized worker, and a different state might have a different standard for what constitutes an unauthorized worker. They might be operating under the same statute, the same law, but the different courts can develop different precedents that interpret that statute in different ways, so that the laws in effect start diverging all over in the different states.

Ted Simons: Real quickly, the idea of this licensing and similar laws this kind of loophole or preemption in this particular law back in '86, what is the government saying, Arizona is just making too big of a case of this? It's too wide open where Arizona is concerned?

Andy Hessick: That's right. The federal government and the chamber of commerce are essentially saying that this licensing exception is very narrow. That the federal government, when it enacted this statute, meant for federal law to could control everything regarding the employment of unauthorized workers except for a very small thing for small section for licensing. And they say this licensing is just sort of a fitness to do business license. Sort of what we might think, are you licensed to go out and install electrical wiring or are you licensed to go out and engage in agricultural work. In fact they point to the -- an old licensing scheme for agricultural work as sort of the paradigm, as the reason why this exception was put in there. So anything that goes beyond that they say isn't the sort of licensing that the law contemplated.

Ted Simons: E-verify also mentioned in this, and again, challengers saying that the state can't require, can't mandate the use of E-verify. Talk to us about that.

Andy Hessick: So this is a completely separate question in the case. Under federal law, there's this system called E-verify which is an electronic system by which employers can determine whether or not a particular applicant for a job is an authorized worker, if he's allowed to work. The federal law says that employers may use this system, Arizona's law says the employers must use it. And if they don't use the system, certain consequences flow from it. And the federal government says well, that Arizona law conflicts with the federal law. The federal law says it's voluntary, and Arizona law is saying it's mandatory. And when those two things conflict, generally there's preemption.

Ted Simons: It sounds like Justice Scalia was saying he couldn't find anything in federal law that would prohibit that kind of mandate. Where are we going? I know that we talked about a little bit about Justice Briar and his concerns, but back to that business of E-verify, he can't seem to find anything that precludes it.

Andy Hessick: The difficulty in cases like this is that the statute's sort of vague. You don't know exactly why it's there. On the one hand we might say E-verify is there to make a more accurate system for enforcement to make sure that unauthorized workers are not being employed. And justice Scalia was pointing to things like, that's the goal and that seems to be on the face of the statute. On the other hand, there might be reasons why the federal government didn't want this system to be mandatory. For example, E-verify has a relatively high error rate right now, it inaccurately says whether someone is authorize or unauthorized to work. And so the federal government might be -- might have thought, this is still a pilot system, let it be voluntary, employers can use it, other systems will develop on the side that might displace it, might be better. Or even another possibility is E-verify itself might be improved and once it's a lot better, then we'll require this system to be used. So there is a potential for a conflict there.

Ted Simons: And real quickly, you mention the idea of a balance and how the Arizona law kind of loses the balance between civil rights, discrimination, and illegal immigration enforcement. Quickly, talk to us about that.

Andy Hessick: So under the federal law, an employer can be sanctioned not only for hiring an unauthorized employee, but also for discriminating against someone who could be hired but is discriminated against on the basis of race or something else that would lead the employer to think that they were unauthorized without actually checking for it. Under the Arizona law, they don't really have an identical system, they say only that the license can be suspended if an unauthorized worker is employed. There's no sort of sanction that arises from discriminating on the basis of race. There are other laws in place, and there are certain provisions in the Arizona law that say that in this law in particular, that say that race can't be the basis of the hiring decision. And I'm sure the investigations undertaken by the Arizona government in pursuing these complaints will be taken in good faith. But there is a concern. Even though there are some provisions in the Arizona law that prevent the discrimination, they're not as -- they're not in parity in the same way as they are under federal law.

Ted Simons: This has lot of implications as far as SB 1070 doesn’t it?

Andy Hessick: I think it does. I think that this case -- I think the Supreme Court will use this case in writing the opinion as an opportunity to set forth a lot of framework for the upcoming SB 1070 case.

Ted Simons: Alright, very good. Andy, thank you so much for joining us. We appreciate it.

Andy Hessick: Thank you.

Job Growth Plan

Governor Jan Brewer has announced a new job growth plan, and has named Don Cardon to head the new Arizona Commerce Authority, which replaces the commerce department. Cardon will talk about the plan and his job.

Ted Simons: Last month Governor Brewer proposed a series of tax cuts and incentives aimed at growing jobs and improving Arizona’s economy. Here to talk about the governor's plan is Don Cardon, president and CEO of the new Arizona commerce authority, which replaces what was the state department of commerce. Good to see you again. Thanks for joining us.

Don Cardon: You too Ted. Thanks for letting me come on.

Ted Simons: Real quickly, for those who aren't up to speed on this, I think most of us probably aren't, what is the Arizona commerce authority?

Don Cardon: In essence, right now it's the same thing as the department of commerce. In statute, the department of commerce still exists, the governor by executive order is changing it to the Arizona commerce authority, it's not just a name change, though, it's substantive in the sense that what we're trying to do, what the governor is proposing is take -- totally taking the department of commerce, which has been in existence for many years, and repealing all of it. Repealing the 58 state statutes and mandates is what we call them, repealing even down to the employees, repealing the really the commission that it has right now and saying, replacing it with the Arizona commerce authority, a privatized approach that we believe is very much different than what's been done over the last few decades.

Ted Simons: It seems like competition increasing Arizona's competitive profile is job number one. Talk about the plan. Talk about the ideas.

Don Cardon: Well, in a big sense what we're really trying to do is we're trying to find a balance for first of all, what level should the government be involved, in terms of advancing a state's economic position. We believe there is a role, we don't believe that it should be the hope of our future for surely not that, but there is a role, so what we believe is that if we move to the assets and the capacities that are existing within the private sector, it allows us to minimize right now a year and a half ago when I asked -- was appointed to this position, we took an agency that was roughly 130 full-time employees, we're proposing to bring it down to in the 40 range, but we're specifically saying it's not just a reduction although that's very important as we're trying to take care of resources that are very limited, our hope is really to engage the private sector. The board is led by Mr. Barrett and Dr. Crow, there's a host of people who are very influential and knowledgeable about this world, and business in it, but what we're specifically trying to do is say, let's get focused on how this state globally competes. Focused in terms of not just organizationally, that's a tool to deliver the future of our state. But what is the state? How does the globe view Arizona? So we've created in essence a focus of four areas, and we said that really right now we can globally compete at a top tier level in science technology and aerospace and defense and renewable energy, and uniquely I believe domestically and small business and entrepreneurship. Arizona is not just that you throw in small business and say, OK, you have to say that because you're trying for these big jobs, but politically you've got to say the small -- it's not it at all. Arizona has an opportunity for people to come into Arizona and do a small business start-up, unlike many, many states if not -- the majority of states in this country. It's very open in terms of what you can come in and do. And we want to try to expand that. But we're going to do it privately.

Ted Simons: I see a lot of the ideas here involving your tax credits or tax cuts. These sorts of things. We had democrats on last night, and they were very upset about the idea, there's no money for transplants. And the governor's office says we'd love to have -- to get those transplants. We don't simply have the money for everything we want. This sounds like a lot of things most people would want. Where are we going to get the money for this?

Don Cardon: First of all, the governor is going to address many of those, and I want to honor her by letting her address that in her state of the state. But I can tell you there's parameters that say, Don, whatever we do, we can't go to a taxation situation to try to tax to make this thing work. We have to do -- I'm born in the woods and stuff, up in Northwest, it's like, you eat what you kill. We need to try and drive the financial resources out of our expanding marketplace, we believe we can create, we need to integrate the private sector to help that process. We're not really looking to the private sector fiscally to write checks in, although APS has graciously said we would be honored to do that. We're trying to activate the talent in those agencies. Back to -- those companies. Back to your question, we're looking at something that is born out of potentially payroll withholdings, from core businesses that are the four areas I mentioned, really the three, not necessarily small business, but those large core base industries, the incremental growth that goes forward that we would take a portion of that to help fund an every-increasing desire to expand and compete globally. But it would be capped, and it would be not a tax deal. We're not looking to the general fund and saying we need some of that, give it to us.

Ted Simons: I know as well you've been quoted as saying the Universities could play a very big part in something like this. And obviously as a team effort and it's a collective effort, but science foundation of Arizona, which a lot of folks see it doing a lot of good, has been targeted by some of the legislature. Universities have been targeted by some of the legislature. How are you going to get lawmakers, movers, shakers, all of them, together to move the ship forward?

Don Cardon: Well, the first thing that I'm going to do is try to focus on what I believe that I have been commissioned to do, which is stay on point about jobs and the economy. You've got a legislative body that -- especially in the recent elections, most of those legislators are there because they're on an economic platform. They know that jobs is number one right now. But I also know that you never ask people that have been elected to represent to do stupid things. We're not going to come forward and try and say, I don't believe the governor doesn't believe fundamentally we succeed through cash and through resources. If I want to, and I'm going to use this example because one of the big components of the privatization is instead of looking to the fiscal opportunities of these private companies could do, I'm saying to Roy, if you were to give me $50,000 to help us advance the state globally, or give me access to your top-tier international executives for three weeks, which one do I want? I take those three weeks every day and Friday. You're going to see us try to activate, we have a paradigm, unfortunately within the elected body, that everything is about money. And I understand that. I'm not naive. But we have to shift and say, there's other assets that are non-fiscal. In order for us to compete, we need talent that I can't afford, this state can't afford. You could go to a variety of companies that these CEOs represent on our board. We can't afford the talent they have, we can't afford the experience that they have. And to be able to access that, what if we say, Roy, give me your top international people to help us do a strategy in Beijing or Shanghai, and you give us three weeks, you come in, and instead of Don Cardon learning a few buzz words about renewable energy and acting like I'm an expert, how about we get true experts to say, if you really want to do it this, is what I would do? And if the state gives them a charitable contribution credit and says, this doesn't equal the scales, but we can create a F 01C 3 to privatize and give you a charitable contribution credit. It doesn't cost the state anything. But we've just engaged the private sector not out of a checkbook, but out of their talent.

Ted Simons: What are you hearing from the legislature as far as, I'm guessing there are going to be a lot of competing ideas in the legislature next session. They will be similar I imagine, but they'll compete with each other. What are hearing as far as getting these ideas through?

Don Cardon: As always, I want to be really truthful. What I'm hearing is, I think the fact that the platform is being led by the governor is huge. Speaker Adams has been very, very strong in her -- in his support saying governor, I want to be right there with you, and I've been encouraged from what I've heard from the conversations going on with president Pearce, he totally understands the nature of this statement how we get there, there's going to be negotiations. There is. There absolutely will be. But overall I think that everybody believes in the concept of shrinking government, getting focused, so that's going to be good. I think we're going to have challenges in terms of deal closing fund or enterprise funds, some of those will come up. And they should. We should have a good dialogue about it. But I tell you what, the governor has steely eye on this, and I'm confident in her.

Ted Simons: Alright well it’s good to see you. Thank you so much for joining us. We appreciate it.